Section 26B of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
126B. Registration by secured creditors and other creditors.-- (1) The Central Government may by notification, extend the provisions of Chapter IV relating to Central Registry to all creditors other than secured creditors as defined in clause (zd) of sub-section (1) of section 2, for creation, modification or satisfaction of any security interest over any property of the borrower for the purpose of securing due repayment of any financial assistance granted by such creditor to the borrower.
- (2)From the date of notification under sub-section (1), any creditor including the secured creditor may file particulars of transactions of creation, modification or satisfaction of any security interest with the Central Registry in such form and manner as may be prescribed.
- (3)A creditor other than the secured creditor filing particulars of transactions of creation, modification and satisfaction of security interest over properties created in its favour shall not be entitled to exercise any right of enforcement of securities under this Act.
- (4)Every authority or officer of the Central Government or any State Government or local authority, entrusted with the function of recovery of tax or other Government dues and for issuing any order for attachment of any property of any person liable to pay the tax or Government dues, shall file with the Central Registry such attachment order with particulars of the assessee and details of tax or other Government dues from such date as may be notified by the Central Government, in such form and manner as may be prescribed.
- (5)If any person, having any claim against any borrower, obtains orders for attachment of property from any court or other authority empowered to issue attachment order, such person may file particulars of such attachment orders with Central Registry in such form and manner on payment of such fee as may be prescribed.]
Summary
- The Central Government can allow creditors other than secured creditors to use the Central Registry to register their security interests (a legal right over a property to secure a loan).
- Any creditor can file details of how their security interest was created, modified, or satisfied in the registry.
- Even if a normal creditor registers their interest, this does not give them the special, fast-track rights to enforce securities that secured creditors (like banks) have under this law.
- Government officials responsible for recovering unpaid taxes must file their property attachment orders with the Central Registry.
- Any person who gets a court order to attach a property can also file the details of that order with the registry.
Practical examples
FAQ
1. Will registering my loan let me seize property like a bank does?
No, an ordinary creditor does not get the special enforcement rights given to secured creditors under this Act just by registering.
2. Do tax authorities have to register property attachments?
Yes, officials recovering government dues must file their attachment orders with the Central Registry.
Test yourself
Q1.Under Section 26B of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, what happens if a creditor who is NOT a secured creditor files their security interest?
Q2.Section 26B of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 distinguishes between secured creditors and other creditors by referring to Section 2. How does Section 2 help determine who is restricted from enforcing securities under Section 26B?
Q3.Under Section 26B of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, what is a local government official required to do after issuing an order to attach a business owner's property for unpaid taxes?
Q4.Under Section 26B of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, if an ordinary person wins a lawsuit and gets a court order to attach someone's property, what are they permitted to do next?